The Centers for Medicare & Medicaid Services (CMS) is doing a lackluster job of recovering the Medicare overpayments that our auditors are uncovering. That’s the frustrated conclusion of a new OIG report finding that the agency has collected only 55 percent of overpayments identified over a review period running from October 1, 2014, to December 31, 2016. However, CMS’ rejection of almost all of the report’s recommendations suggest that there is significant dissension within the ranks.

The OIG’s Findings

CMS reported to the Office of Inspector General (OIG) for the United States Department of Health and Human Services (HHS) that it had collected only $272 million (55 percent) of the $498 million in Medicare overpayments identified in the HHS-OIG audit reports issued during the review period. In effect, CMS left $226 million (45 percent) in overpayments on the table. And even the $272 million reportedly collected was a bit shaky, given that the records CMS provided the OIG documented collection of only $120 million. CMS didn’t provide adequate documentation to support collection of the remaining $152 million.

This is hardly the first time the OIG has called out CMS for doing a poor job of recovering identified Medicare overpayments. A May 2012 OIG report found that CMS had failed to collect $332 million of the $416 million worth of overpayments identified in audit reports issued during the 30-month period ending March 31, 2009. To make matters worse, the OIG concluded that it couldn’t verify the $84.2 million that CMS reported that it did collect and that it found inaccuracies in the reported amount.

Adding insult to injury, the OIG chided CMS for not taking corrective action in response to the May 2012 report. Of the six recommendations contained in the previous report, CMS agreed to implement four but wound up actually implementing only two, taking only partial action on one and no action on the other.

What Went Wrong?

Just as it did in 2012, OIG concluded that CMS didn’t have one of the primary components of an effective internal control system, namely, “adequate policies and procedures to address certain collection issues” identified by OIG audits. And without such policies and procedures, CMS can’t ensure that Medicare overpayments will be collected to the maximum extent possible.

CMS also failed to provide specific guidance to its Medicare Administrative Contractors (MACs) as to what would constitute appropriate documentation to support overpayment collections, the OIG continues. Debt Collection Manual and Technical Directions Letters (TDLs) call on MACs to recover overpayments but don’t offer much in the way of specifics. Thus, for example, while one TDL says the MAC should “review the [OIG] identified overpayments[,] adjust the claims and issue demand letters, as appropriate,” it doesn’t specify the types of documentation required to support overpayment collections. Too often, collection matters are left to be handled on a case-by-case basis.

The OIG’s Recommendations

The real takeaway of the report comes from the OIG’s recommendations, more precisely, CMS’ response to them. In a rare public display of disharmony between federal agencies, CMS indicated its non-concurrence with seven of the nine measures the OIG called on it to do to improve collections of overpayments uncovered by OIG audits. The response suggests significant philosophical differences about the adequacy of current overpayment recovery systems, policies, and procedures, with CMS pooh-poohing many of OIG’s recommended measures as either unnecessary, redundant, or unrealistic. Even the two recommendations that CMS did accept came with grumbles.